Economic Times
30 May 2011
By Khyati Dharamsi

How often have you questioned the medicine prescribed by your doctor? Or challenged the cost of the medicine? In all probability, never. The blind faith in the physician, compounded by the patient's ignorance, makes for a potent combination. Often, this is the prescription for fuelling your medical bills. This need not be the case as there are ways to cut your medical bill by nearly 90% in some cases (see table).

The question this begs is, why do we pay such heavy bills? The logic is easy enough to understand. You pay for a medicine that has been prescribed by your doctor, who, in turn, is wooed by several drug manufacturers to buy their brands. The medicine he picks is the one he prescribes to you. The costlier the drug, the bigger your bill.

Why do some medicines cost more than the others?
Saroj Shah, a Mumbai–based housewife, was asked by the doctor to purchase an antacid, Entac, which cost her Rs 67 for a pack of 10 tablets. However, she could have bought another medicine, Lantac, which would have worked just as well for as little as Rs 3.60 for the same number of tablets. The price difference–Rs 63.4 or an incredible 94.6%. Can one actually buy drugs that are as cheap but equally effective? If so, how does one explain the price difference? Here are some of the reasons why there is a wide variation in the drug prices:

Branded vs generic drugs:
A branded drug is one which has been developed by a particular company after a lot of research and development. Hence, it is protected by patent laws and is marketed under the manufacturer's name. However, once the patent period expires, other drug manufacturers jump into the fray, increasing the competition and lowering the prices.

This is because these companies do not incur the cost of testing and developing the medicine from scratch, only that of production. Such medicines are called generics or generic drugs. They have the same active ingredients as the original medicine, identical dosage, strength and efficacy as well as the manner of administration, but are sold under the chemical name instead of the manufacturer's name. As Dr Deepak Ugra, head of department, paediatrics, Lilavati Hospital, Mumbai, says, "The cost depends on whether the original molecule was developed by the company after research because, in this case, it will want to recover the cost of research and development."